18

Apr

Cities Push Employers to Ignore Pay History

New laws seek to bar hiring managers from asking about an applicant’s current salary

By Kelsey Gee, WSJ

The most awkward part of a job interview may soon disappear, as a rash of cities and states consider laws barring employers from asking how much applicants already make.

Hiring managers in New York City could soon be fined for looking into—or asking about—a job seeker’s salary or benefits in a past role, based on a bill that awaits Mayor Bill de Blasio’s signature. The measure, approved by a city council vote last week, adds private-sector companies to the list of city agency employers forbidden from using that information in pay negotiations.

The latest legislative move escalates mounting pressure on companies to address discrepancies in the way women and minority workers are paid. Massachusetts and Philadelphia have in the past year approved bans on previous-salary inquiries and similar restrictions are up for debate in over a dozen local legislatures from Washington, D.C., to Texas.

For every dollar a white male earned in 2015, women and minorities made around 80 cents or less, according to the latest census data. Proponents of salary history bans say this pay gap could be narrowed if managers ignored past wage figures, which could be unfairly low or irrelevant to new positions.

“Asking about a candidate’s salary history hurts women who may not have been paid enough in a previous job, as the biased figure follows them into their next job,” said Evelyn Murphy, an economist and co-chair of a women’s workforce council in Boston, where she advocated for the Massachusetts law that takes effect July 2018.

Not everyone agrees.

The Philadelphia Chamber of Commerce sued last week to halt the rollout of the city’s ban, which is scheduled to take effect next month, arguing the ordinance infringed upon businesses’ free-speech rights. An attorney representing telecom giant Comcast Corp. , based there, and other Chamber members sent a letter in December to the city solicitor warning of “likely legal challenges” if the measure wasn’t vetoed.

Christina Wong, vice president of ESM Productions in Philadelphia, says her small staff would struggle to hire the roughly 1,500 temporary camera crew members, set designers and others to stage and operate conferences and concerts each year. Since the company operates in markets of varying sizes across the globe, she said, the firm gauges local pay by asking for a worker’s typical rate.

Others argue that bans are unlikely to address the real origins of pay imbalance. “If you want to talk about pay inequity look at the people who get promoted within a company” not compensation at the time of hire, said Judee von Seldeneck, founder of Philadelphia-based Diversified Search, an executive talent firm which specializes in finding diverse candidates for corporate boards.

Men begin outearning women almost immediately upon entering the workforce, even if they share the same college major or occupation. In 2016, degree-holding men age 21 to 24 earned $20.94 an hour on average, compared with $16.58 for women, according to an analysis by the left-leaning Economic Policy Institute. That gap widens if managers use past pay to set future salaries, advocates of the new laws say, which is why employers should set clearer pay expectations for the specific role.